Sri Lanka's central bank cut interest rates Tuesday as the country emerged from its worst economic crisis that forced the ouster of a president.
The Central Bank of Sri Lanka reduced its benchmark lending rate from 10 percent to 9.5 percent and the deposit rate from 9.0 to 8.5 percent, the first reduction in four months.
The bank said it would boost "the ongoing revival of economic activity".
Sri Lanka is currently drawing down a four-year $2.9 billion bailout loan from the International Monetary Fund, and is in talks with foreign creditors over a debt restructure.
The IMF last week urged Sri Lanka to speed up finalising debt restructure deals with its bilateral lenders, including China, the main official creditor of the South Asian nation.
Sri Lanka's Prime Minister Dinesh Gunawardena is currently in Beijing for talks with Chinese leaders.
The bank said the economy had grown since the second half of last year to contain the overall contraction in 2023 to 2.3 percent.
That compared with a 7.3 percent shrinkage in 2022 when an unprecedented economic crisis gripped the nation and months of protests forced then-president Gotabaya Rajapaksa to resign in July 2022.
The peak of the economic crisis in 2022 saw months of food, fuel and pharmaceutical shortages after the island ran out of foreign exchange.
New President Ranil Wickremesinghe has doubled taxes, cut generous energy subsidies and raised prices of essentials to shore up state revenues.
Tourism and foreign remittances have also picked up considerably.
The number of tourists visiting the country jumped to 210,000 in December, more than double the 91,900 a year earlier, according to official data.